First Loan from a Portfolio Lender to Finance First Flip

[Tom Pignatello]

Hello all,

I have a question regarding getting my first loan through a portfolio lender to finance my first flip.

I hear a lot of people say that you should have your financing in place and be pre-approved before looking for deals and securing a deal. I have also heard when going to a local bank to get a portfolio loan you should have a business plan to show the lender and convince them that your investment will produce positive returns resulting in a low possibility of defaulting on the loan. 

So what comes first? Do I find a deal, run the numbers, and put together a business plan before going to the lender trying to get a loan? If the lender approves the requested loan, then do I go make an offer? My concern is that if I do it this way, the deal will likely no longer be available by the time I have the financing in place. 

Any advice will be greatly appreciated! Thank you!

[Tom S.]

@Tom Pignatello  My experience has been to at least send over the application and your financials first to see if the lender is interested in working with you. They may have a min credit requirement, require xx amount of bank statements, tax returns, etc. I felt the paperwork is about the same as a nationwide lender, but the turnaround time much quicker.

Then find a deal and present it.  There would be additional review at this point: ordering the appraisal, downpayment requirements, and the paperwork for the rehab draws and terms.

The local banks I've worked with required 25% down on the purchase price, the rehab was done in drwas after the inspections, but all one closing and then the loan converted to a permanent loan once the draws were complete.

20 year term resetting every 5 years, for me.  I do mine as buy and hold and I noticed you said "flip", so your terms may be a bit different.

Hope that helps and good luck!

- Tom